Noth­ing hazy about pot tax

Walsh aims high to avoid drag on cannabis cof­fers

Boston Herald - - NEWS - By DAN ATKINSON — dan.atkinson@boston­her­ald.com

Mayor Martin J. Walsh is urg­ing coun­cilors to tax le­gal weed to the max at ev­ery pot shop in the city as the nearly $2 bil­lion Bay State mar­i­juana mar­ket is set to sprout in July.

Im­pos­ing a 3 per­cent lo­cal op­tion tax is also seen by the mayor’s camp as not enough to po­lice the new in­dus­try, the Her­ald has learned.

“The mayor has pro­posed adopt­ing a 3 per­cent lo­cal sales tax to con­trib­ute to­wards the fund­ing the city of Bos­ton will need to cover the an­nual cost of reg­u­lat­ing, en­forc­ing and ed­u­ca­tion around recre­ational mar­i­juana,” said Walsh spokes­woman Ni­cole Car­avella.

Other ci­ties and towns are also con­sid­er­ing the added tax as they brace for recre­ational pot to be sold start­ing next sum­mer.

“They’re go­ing to look at Bos­ton and say yes, we should get this on the books now so we’re pre­pared to start col­lect­ing when one of these opens up in our towns,” said Jim Borgh­e­sani, a pro-mar­i­juana ad­vo­cate who worked on the le­gal­iza­tion cam­paign. “There’s go­ing to be a great op­por­tu­nity for profit.”

In a let­ter to the City Coun­cil, Walsh asks for coun­cilors to al­low the pot sales tax and to fix it at the “max­i­mum-al­lowed 3 per­cent rate,” even though no shops have even ap­plied and the state Cannabis Con­trol Com­mis­sion is still cre­at­ing a frame­work for le­gal­iza­tion.

“Al­though there are not yet any mar­i­juana re­tail­ers in Bos­ton, I rec­om­mend ac­cep­tance of this statute now in order to be able to tax such sales in the event that a mar­i­juana re­tailer is li­censed and lo­cated in Bos­ton,” Walsh wrote in his mes­sage to coun­cilors, who are ex­pected to hear the mea­sure today.

Af­ter vot­ers le­gal­ized recre­ational weed last year, state of­fi­cials cre­ated a sys­tem al­low­ing for a whop­ping 23 per­cent tax on sales.

The state will take a 10.75 per­cent ex­cise tax on top of the cur­rent 6.25 per­cent sales tax, but ci­ties and towns can hand down their own tar­iffs as well — an over­all sales tax of up to 3 per­cent on all gross sales. Com­mu­ni­ties can also cre­ate “host agree­ments” with in­di­vid­ual shops that al­low them to take an ad­di­tional 3 per­cent of gross sales for up to five years.

And that could lead to mil­lions of pot dol­lars pour­ing into city cof­fers.

City of­fi­cials es­ti­mate col­lect­ing be­tween $2 mil­lion and $3 mil­lion in sales tax rev­enue for fis­cal year 2019 — the first full year of le­gal mar­i­juana sales. Those dol­lars are ear­marked for the gen­eral fund.

But those es­ti­mates are “very con­ser­va­tive,” Borgh­e­sani said. He said that based on Colorado’s sales, the slightly larger Bay State could see $1.7 bil­lion in pot re­ceipts — with a 3 per­cent sales tax bring­ing in $50 mil­lion. That would have Bos­ton, with 10 per­cent of the state’s pop­u­la­tion, pulling in $5 mil­lion.

Borgh­e­sani pre­dicted the city would be able to di­rect that money to­ward other goals in­stead of new pot-re­lated costs.

“They won’t have to hire more po­lice of­fi­cers and city in­spec­tors, that’s not go­ing to hap­pen,” Borgh­e­sani said. “It’s dif­fi­cult to be­lieve that these stores will im­pose a sig­nif­i­cant bur­den on a town, just the op­po­site — it will help gen­er­ate new rev­enue.”

STAFF FILE PHOTOS, ABOVE, BY MATT STONE; RIGHT, BY AN­GELA ROWLINGS; AP FILE PHOTO, TOP

HASH­ING OUT THE DE­TAILS: Mayor Martin J. Walsh, above, is push­ing to estab­lish the city’s pot sales tax be­fore shops open next year. Ad­vo­cate Jim Borgh­e­sani, right, said get­ting num­bers on the books will help pre­pare for a full roll­out.

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